##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-16265
 
 ELECTRIC CITY CORP.
  Delaware
    
    36-4197337(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1280 Landmeier Road, Elk Grove Village, Illinois 60007-2410
  (847) 437-1666
 
   þ o
  o o þ
  o þ




---



##### 



ELECTRIC CITY CORP.
FORM 10-Q  For The Quarter Ended March 31, 2006
 INDEX
 PageNumberPart I Financial InformationITEM 1. Financial Statements:Condensed Consolidated Balance Sheets
March 31, 2006 (unaudited) and December 31, 2005
    
    
    1Condensed Consolidated Statement of Operations
Three Months Ended March 31, 2006 and 2005 (unaudited)
    
    
    3Condensed Consolidated Statement of Stockholders Equity
Three months Ended March 31, 2006 (unaudited)
    
    
    4Condensed Consolidated Statement of Cash Flows
Three months Ended March 31, 2006 and 2005 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    16ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22ITEM 4. Control and Procedures
    
    
    22Part II. Other Information:ITEM 1. Legal Proceedings
    
    
    23ITEM 1A. Risk Factors
    
    
    23ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24ITEM 6. Exhibits
    
    
    24Signatures
    
    
    24302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer




---



##### Table of Contents



ELECTRIC CITY CORP.
 
 CONDENSED CONSOLIDATED BALANCE SHEET
 March 312006
    
    
    December 31,(unaudited)
    
    
    2005(1)AssetsCurrent AssetsCash and cash equivalents
    
    $
    1,898,775
    
    
    $
    4,229,150Accounts receivable, net
    
    
    1,527,112
    
    
    
    1,747,019Inventories
    
    
    1,449,804
    
    
    
    1,457,789Advances to suppliers
    
    
    260,452
    
    
    
    324,677Costs and estimated earnings in
excess of billings on
uncompleted contracts
    
    
    28,462
    
    
    
    28,462Prepaid expenses and other
    
    
    273,875
    
    
    
    207,480Total Current Assets
    
    
    5,438,480
    
    
    
    7,994,577Net Property and Equipment
    
    
    2,462,625
    
    
    
    2,514,196Deferred Financing Costs
    
    
    248,739
    
    
    
    299,964Intangibles, net
    
    
    1,783,923
    
    
    
    1,960,835Cost in Excess of Assets Acquired
    
    
    4,155,660
    
    
    
    4,329,402$
    14,089,427
    
    
    $
    17,098,974
 - 1 -




---



##### Table of Contents



ELECTRIC CITY CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
 March 31,2006
    
    
    December 31,(unaudited)
    
    
    2005(1)Liabilities
and Stockholders EquityCurrent LiabilitiesLine of credit
    
    $
    1,128,248
    
    
    $
    2,000,000Accounts payable
    
    
    967,198
    
    
    
    913,369Current maturities of long-term debt
    
    
    1,189,752
    
    
    
    651,313Accrued expenses
    
    
    1,044,615
    
    
    
    1,228,765Notes payable
    
    
    150,000
    
    
    
    150,000Deferred revenue
    
    
    990,843
    
    
    
    984,728Customer deposits
    
    
    1,387,477
    
    
    
    1,419,919Total Current Liabilities
    
    
    6,858,133
    
    
    
    7,348,094Deferred Revenue
    
    
    1,120,882
    
    
    
    1,044,524Long-Term Debt, less current
maturities, net of unamortized discount
of $825,875 and $898,409 at March 31,
2006 and December 31, 2005, respectively
    
    
    3,738,513
    
    
    
    4,328,719Total Liabilities
    
    
    11,717,528
    
    
    
    12,721,337Stockholders EquityPreferred stock, $.01 par value;
5,000,000 shares authorized Series E 
232,613 and 236,254 issued and
outstanding as of March 31, 2006 and
December 31, 2005, respectively
(liquidation value of $46,523,000 and
$47,250,000 at March 31, 2006 and
December 31, 2005, respectively)
    
    
    2,327
    
    
    
    2,363Common stock, $.0001 par
value; 200,000,000 shares
authorized, 51,297,120 and
50,797,024 issued as of March 31,
2006 and December 31, 2005,
respectively
    
    
    5,131
    
    
    
    5,081Additional paid-in capital
    
    
    64,719,667
    
    
    
    64,768,814Accumulated deficit
    
    
    (62,355,226
    )
    
    
    (60,398,621
    )Total Stockholders
Equity
    
    
    2,371,899
    
    
    
    4,377,637$
    14,089,427
    
    
    $
    17,098,974
 See accompanying notes to condensed consolidated financial statements
 (1)
    
    Derived from audited financial statements in the Companys annual
report on Form 10-K for the year ended December 31, 2005
 - 2 -




---



##### Table of Contents



ELECTRIC CITY CORP.
 
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 (Unaudited)
 Three months ended, March 31
    
    2006
    
    
    2005Revenue
    
    $
    1,146,345
    
    
    $
    250,713ExpensesCost of sales
    
    
    908,402
    
    
    
    104,971Selling, general and administrative
    
    
    1,925,915
    
    
    
    990,8682,834,317
    
    
    
    1,095,839Operating loss
    
    
    (1,687,972
    )
    
    
    (845,126
    )Other Income (Expense)Interest income
    
    
    20,711
    
    
    
    6,984Interest expense
    
    
    (267,919
    )
    
    
    (74,815
    )Total other expense
    
    
    (247,208
    )
    
    
    (67,831
    )Loss from continuing operations
    
    
    (1,935,180
    )
    
    
    (912,957
    )Discontinued Operations(Loss) income from discontinued operations
    
    
    (21,425
    )
    
    
    237,700Net Loss
    
    
    (1,956,605
    )
    
    
    (675,257
    )Plus Preferred Stock Dividends
    
    
    (615,290
    )
    
    
    (334,800
    )Net Loss Available to Common Shareholder
    
    $
    (2,571,895
    )
    
    $
    (1,010,057
    )Basic and diluted loss per common share from
continuing operations
    
    
    (0.05
    )
    
    
    (0.03
    )Discontinued operations
    
    
    
    
    
    
    0.01Basic and Diluted Net Loss Per Common Share
    
    $
    (0.05
    )
    
    $
    (0.02
    )Weighted Average Common Shares Outstanding
    
    
    51,156,828
    
    
    
    41,766,577
 See accompanying notes to condensed consolidated financial statements
 - 3 -




---



##### Table of Contents



ELECTRIC CITY CORP.
 
 STATEMENT OF CONDENSED CONSOLIDATED STOCKHOLDERS EQUITY
 (Unaudited)
 Series E
    
    
    Series E
    
    
    Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Common
    
    
    Preferred
    
    
    Preferred
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Stock
    
    
    Shares
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance,December 31, 2005
    
    
    50,797,024
    
    
    $
    5,081
    
    
    
    236,254
    
    
    $
    2,363
    
    
    $
    64,768,814
    
    
    $
    (60,398,621
    )
    
    $
    4,377,637Conversion of Series E Preferred Stock
    
    
    713,000
    
    
    
    71
    
    
    
    (7,130
    )
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    Shares received for sale of Great Lakes
Controlled Energy Corporation
    
    
    (212,904
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (193,722
    )
    
    
    
    
    
    
    (193,743
    )Cumulative dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (348,900
    )
    
    
    
    
    
    
    (348,900
    )Satisfaction of accrued dividends through
the issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    3,489
    
    
    
    35
    
    
    
    348,865
    
    
    
    
    
    
    
    348,900Share based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,610
    
    
    
    
    
    
    
    144,610Net loss for the three months ended
March 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,956,605
    )
    
    
    (1,956,605
    )Balance,March 31, 2006
    
    
    51,297,120
    
    
    $
    5,131
    
    
    
    232,613
    
    
    $
    2,327
    
    
    $
    64,719,667
    
    
    $
    (62,355,226
    )
    
    $
    2,371,899
 See accompanying notes to condensed consolidated financial statements.
 - 4 -




---



##### Table of Contents



ELECTRIC CITY CORP.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three months ended March 31
    
    2006
    
    
    2005Cash Flow from Operating ActivitiesNet loss
    
    $
    (1,956,605
    )
    
    $
    (675,257
    )Adjustments to reconcile net loss to net cash used in
operating activities, net of dispositionsDepreciation and amortization
    
    
    221,715
    
    
    
    12,603Provision for bad debts
    
    
    14,415
    
    
    
    Warrants issued in exchange for services received
    
    
    
    
    
    
    129,700Amortization of deferred financing costs
    
    
    51,225
    
    
    
    27,630Amortization of original issue discount
    
    
    72,534
    
    
    
    13,842Share based compensation
    
    
    144,610
    
    
    
    Changes in assets and liabilities, net of dispositionsAccounts receivable
    
    
    (89,394
    )
    
    
    554,682Inventories
    
    
    (2,015
    )
    
    
    (186,315
    )Advances to suppliers
    
    
    64,225
    
    
    
    Other current assets
    
    
    (80,322
    )
    
    
    (47,548
    )Accounts payable
    
    
    258,758
    
    
    
    (261,828
    )Accrued expenses
    
    
    (107,973
    )
    
    
    (141,585
    )Deferred revenue
    
    
    198,989
    
    
    
    (273,893
    )Other current liabilities
    
    
    (32,442
    )
    
    
    Net cash used in operating activities
    
    
    (1,242,280
    )
    
    
    (847,969
    )Cash Flows Used In Investing ActivitiesSale of discontinued operations
    
    
    (83,586
    )
    
    
    Purchase of property and equipment
    
    
    (9,704
    )
    
    
    (122,309
    )Net cash used in investing activities
    
    
    (93,290
    )
    
    
    (122,309
    )Cash Flows Provided by Financing ActivitiesBorrowings (payments) on line of credit
    
    
    (871,752
    )
    
    
    2,000,000Payment on long-term debt
    
    
    (123,053
    )
    
    
    (79,834
    )Net cash provided by (used in) financing activities
    
    
    (994,805
    )
    
    
    1,920,166Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (2,330,375
    )
    
    
    949,888Cash and Cash Equivalents, at beginning of period
    
    
    4,229,150
    
    
    
    1,789,808Cash and Cash Equivalents, at end of period
    
    $
    1,898,775
    
    
    $
    2,739,696Supplemental Disclosure of Cash Flow InformationCash paid
during the periods for interest  continuing operations
    
    $
    167,884
    
    
    $
    20,728Cash paid
during the periods for interest  discontinued operations
    
    
    42
    
    
    
    120
 - 5 -




---



##### Table of Contents



Cash
    
    $
    83,586Accounts receivable
    
    
    294,886Inventory
    
    
    10,000Other current assets
    
    
    10,788Property and equipment
    
    
    16,472Cost in excess of assets acquired
    
    
    173,742Total assets sold
    
    
    589,474Accounts payable
    
    
    (204,929
    )Accrued expenses
    
    
    (76,177
    )Deferred revenue
    
    
    (116,516
    )Notes payable
    
    
    (1,248
    )Total liabilities assumed
    
    
    (398,870
    )Net assets sold
    
    
    190,604Value of shares received
    
    
    193,743Less amount due purchasers as post closing adjustment
    
    
    (3,139
    )Net value received
    
    
    190,604Loss on disposal of discontinued operations
    
    $
    
 See accompanying notes to condensed consolidated financial statements
 - 6 -




---



##### Table of Contents



Electric City Corp.
 
 Notes to Financial Statements
 Note
1  Basis of Presentation
     Note 2  Stock-based Compensation
  - 7 -




---



##### Table of Contents



Three Months EndedMarch 31, 2005Net Loss, as reported
    
    $
    (675,000
    )Deduct: Stock-based employee compensation
expense included in reported net loss
    
    
    Add: Total stock-based employee compensation
expense determined under fair value based method for awards
    
    
    (159,000
    )Net Loss, pro-forma
    
    
    (834,000
    )Preferred stock dividends
    
    
    (335,000
    )Net Loss Available to Common Shareholder
    
    $
    (1,169,000
    )Net loss per share:Basic and diluted  as reported
    
    $
    (0.02
    )Basic and diluted  pro forma
    
    $
    (0.03
    )
  Three months endedMarch 31,
    
    March 31,2006
    
    2005Significant assumptions (weighted
average):Risk-free rate
    
    
    3.29
    %
    
    
    4.94
    %Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    72.6
    %
    
    
    98.9
    %Expected life (years)
    
    
    6.4
    
    
    
    8.5
   - 8 -




---



##### Table of Contents



WeightedExercise
    
    
    AveragePrice Per
    
    
    ExerciseShares
    
    
    Share
    
    
    PriceOutstanding at December 31, 2005
    
    
    12,000,015
    
    
    $
    0.84-$12.99
    
    
    $
    3.10Granted
    
    
    875,000
    
    
    $
    0.62-$1.00
    
    
    $
    0.78Forfeited
    
    
    (128,749
    )
    
    $
    1.00-$2.05
    
    
    $
    1.33Outstanding at March 31, 2006
    
    
    12,746,266
    
    
    $
    0.62-$12.99
    
    
    $
    2.96Options exercisable at March 31, 2006
    
    
    11,162,938
    
    
    $
    0.84-$12.99
    
    
    $
    3.17
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageOutstanding at
    
    
    Contractual
    
    
    Exercise
    
    
    Exercisable at
    
    
    ExerciseExercise Price
    
    March 31, 2006
    
    
    Life
    
    
    Price
    
    
    March 31, 2006
    
    
    Price$0.62 - $2.00
    
    
    8,396,632
    
    
    5.1 years
    
    $
    1.12
    
    
    
    6,981,636
    
    
    $
    1.17$2.01 - $4.00
    
    
    488,334
    
    
    7.0 years
    
    
    2.52
    
    
    
    453,334
    
    
    
    2.54$4.01 - $6.00
    
    
    175,000
    
    
    4.1 years
    
    
    4.53
    
    
    
    175,000
    
    
    
    4.53$6.01 - $8.00
    
    
    3,634,000
    
    
    4.0 years
    
    
    7.09
    
    
    
    3,500,668
    
    
    
    7.09$8.01 - $10.00
    
    
    52,000
    
    
    3.8 years
    
    
    9.00
    
    
    
    52,000
    
    
    
    9.00$10.01 - $13.00
    
    
    300
    
    
    4.9 years
    
    
    12.99
    
    
    
    300
    
    
    
    12.9912,746,266
    
    
    4.8 years
    
    $
    2.96
    
    
    
    11,162,938
    
    
    $
    3.17
   Note
3  Revenue Recognition
  - 9 -




---



##### Table of Contents



Note
4  Discontinued Operations
   - 10 -




---



##### Table of Contents



March 31,
    
    
    December 31,2006
    
    
    2005Accounts receivable
    
    $
    
    
    
    $
    439,456Other current assets
    
    
    
    
    
    
    45,287Total current assets
    
    
    
    
    
    
    484,743Net property plant and equipment
    
    
    
    
    
    
    16,028Total assets
    
    
    
    
    
    $
    500,771Accounts payable
    
    $
    
    
    
    $
    73,825Accrued expenses
    
    
    
    
    
    
    81,167Current portion of long term debt
    
    
    
    
    
    
    2,160Deferred revenue
    
    
    
    
    
    
    241,154Customer deposits
    
    
    
    
    
    
    50,000Total current liabilities
    
    
    
    
    
    
    448,306Total liabilities
    
    $
    
    
    
    $
    448,306
  Three Months EndedMarch 312006
    
    2005Revenue
    
    $
    485,787
    
    
    $
    490,574Net (loss) income
    
    
    (21,425
    )
    
    
    237,700
 Note
5  Net Loss Per Share
  - 11 -




---



##### Table of Contents



Three Months EndedMarch 312006
    
    2005Weighted average shares
issuable upon exercise of
outstanding options
    
    
    12,548,635
    
    
    
    11,220,515Weighted average shares
issuable upon exercise of
outstanding warrants
    
    
    16,171,325
    
    
    
    11,181,021Weighted average shares
issuable upon conversion of
preferred stock
    
    
    23,269,472
    
    
    
    22,324,953Weighted average shares
issuable upon conversion of
convertible debt
    
    
    5,622,290
    
    
    
    1,071,429Total
    
    
    57,611,722
    
    
    
    45,797,918
  - 12 -




---



##### Table of Contents



Note 6  Warranty Obligations
  Three Months EndedMarch 312006
    
    
    2005Balance, beginning of period
    
    $
    208,300
    
    
    $
    151,008Warranties issued
    
    
    13,500
    
    
    
    32,048Settlements
    
    
    (33,546
    )
    
    
    (10,632
    )Balance, as of March 31
    
    $
    188,254
    
    
    $
    172,424
 Note 7  Inventories
  March 31,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    835,705
    
    
    $
    919,832Finished goods
    
    
    614,099
    
    
    
    537,957$
    1,449,804
    
    
    $
    1,457,789
 Note
8  Line of Credit
  - 13 -




---



##### Table of Contents



Note 9  Dividends
  Three Months EndedMarch 312006
    
    
    2005Accrual of Dividend on Series E
Convertible Preferred
    
    $
    348,900
    
    
    $
    334,800Deemed dividend associated with change in
exercise price of warrants issued to
preferred investor
    
    
    266,390
    
    
    
    Total
    
    $
    615,290
    
    
    $
    334,800
 Note
10  Business Segment Information
     - 14 -




---



##### Table of Contents



Note
11  Equity Issuances
 (a)
    
    During the first three months of 2006, two holders of the Companys Series E Convertible
Preferred Stock converted a total of 7,130 shares of Series E Convertible Preferred Stock into
713,000 shares of common stock.
 (b)
    
    Effective March 31, 2006, the Company received 212,904 shares of its common stock as part of
the sale of its Great Lakes Controlled Energy Corporation subsidiary to Messrs. Eugene Borucki
and Denis Enberg.
 (c)
    
    Effective March 31, 2006, the Board of Directors declared dividends payable on the Companys
Series E Convertible Preferred Stock of $348,900. The dividends were paid with 3,489
additional shares of Series E Convertible Preferred Stock. Each share of Series E Convertible
Preferred Stock is convertible into 100 shares of the Companys common stock.
 Note
12  Related Party Transactions
  - 15 -




---



##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
  Results of Operations
     - 16 -




---



##### Table of Contents




    
    direct labor and commission costs related to our employee sales force;
    
    expenses related to our non-manufacturing management, supervisory and staff salaries and
employee benefits;
    
    commission costs related to our independent sales representatives and our distributors;
    
    costs related to insurance, travel and customer entertainment and office supplies costs
and the cost of non-manufacturing utilities;
    
    costs related to marketing and advertising our products;
    
    costs of outside professionals such as lawyers, accountants, and investor relations
professionals;
    
    research and development expenses;
    
    costs related to administrative functions that serve to support the existing businesses
of the Company, as well as to provide the infrastructure for future growth.
  Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005.
    - 17 -




---



##### Table of Contents



Liquidity and Capital Resources
    - 18 -




---



##### Table of Contents



Three months ended March 31,
    
    2006
    
    
    2005Net cash used in operating activities
    
    $
    (1,242,280
    )
    
    $
    (847,969
    )Net cash used in investing activities
    
    
    (93,290
    )
    
    
    (122,309
    )Net cash provided by (used in) financing activities
    
    
    (994,805
    )
    
    
    1,920,166Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (2,330,375
    )
    
    
    949,888Cash and Cash Equivalents, at beginning of period
    
    
    4,229,150
    
    
    
    1,789,808Cash and Cash Equivalents, at end of period
    
    $
    1,898,775
    
    
    $
    2,739,696
 Three months Ended March 31, 2006 Compared to Three months Ended March 31, 2005.
  Operating Activities
   Investing Activities
  - 19 -




---



##### Table of Contents



Financing Activities
  LIQUIDITY
     
    
    Focus on increasing the commercial sales of our products. Key to this strategy
is the integration of the Electric City and MPG sales forces with the intent that the
integrated sales force will sell all of our products to current, prior and future
customers. We believe that this change will increase our base of commercial opportunities
and allow us to offer a broader array of energy solutions to our customers thereby
increasing the value of each customer relationship. This reorganization of our sales
staffs will involve the cross training of all of our sales people in the sale of the
EnergySaver, eMAC and other energy conservation products and services. We also plan to
hire additional sales people in an attempt to expand our commercial sales efforts.
    
    Expand and improve the product line through internal development or acquisition.
An expanded product line would allow us to offer additional solutions to our customers,
thereby increasing the value of each customer relationship.
    
    Aggressively manage our costs in order to conserve cash. We made some progress
in reducing our costs during the last several years, but we plan to focus on eliminating
redundant operations
 - 20 -




---



##### Table of Contents



and leveraging the synergies available as a result of the acquisition of MPG to further
reduce our costs.
    
    Sell our Building Automation Controls business. This sale, which was completed
effective March 31, 2006 will allow us to focus exclusively on the sale of our Energy
Technology products and services and will reduce the cash consumed in future periods.
    
    Secure additional capital to continue to fund operations until the business turns
cash flow positive. Our ability to raise additional capital in the future will depend
a great deal on our ability to make progress toward the goals outline above.
    Cautionary Note Regarding Forward-Looking Statements
  - 21 -




---



##### Table of Contents



Quantitative and Qualitative Disclosures About Market Risk
 1 2
 
 Controls and Procedures
 a.
    
    Evaluation of disclosure controls and procedures.Our chief executive officer and chief financial officer, after evaluating the effectiveness
of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of
the period covered by the report, have concluded that our disclosure controls and procedures
were effective as of the end of the period covered by the report.b.
    
    Changes in internal controls.There were no significant changes in our internal controls or in other factors that could
significantly affect the Companys internal controls during the period covered by the
report.c.
    
    Disclosure controls and procedures.Disclosure controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
 - 22 -




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Legal Proceedings
  
 Risk Factors
 If our common stock is delisted from the American Stock Exchange, the trading market for your stock
may be reduced making it more difficult for you to sell your stock and making it more difficult for
the Company to raise capital.
   - 23 -




---



##### Table of Contents



Unregistered Sales of Equity Securities and Use of Proceeds
 (1)
    
    On March 8, 2006, our Board of Directors declared dividends payable on our Series E
Convertible Preferred Stock for the calendar quarter ending March 31, 2006 to shareholders
of record of the Series E Convertible Preferred Stock as of March 31, 2006. The dividends
were paid with 3,489 additional shares of Series E Convertible Preferred Stock. Each share
of Series E Convertible Preferred Stock is convertible into 100 shares of our common stock.
 
 Exhibits.
 31.1
    
    Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)
and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 31.2
    
    Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)
and 15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 32.1
    
    Certification of the Chief Executive Officer of the Corporation Pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 32.2
    
    Certification of the Chief Financial Officer of the Corporation Pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 - 24 -




---



##### Table of Contents



SIGNATURES
  ELECTRIC CITY CORP.:Dated: May 15, 2006
    
    By:
    

/s/ David AsplundDavid AsplundChief Executive Officer (principalexecutive officer)Dated: May 15, 2006
    
    By:
    
    /s/ Jeffrey MistarzJeffrey MistarzChief Financial Officer (principalfinancial and accounting officer)
 - 25 -